AGENDA ITEM 16
July 27, 2010
Introduction
MEMORANDUM
TO:
FROM:
County Council
~
Michael Faden, Senior Legislative Attorney
Introduction:
Expedited Bill 44-1 0, Room Rental and Transient Tax ­
Exemption - Corporate Facility
SUBJECT:
Expedited Bill 44-10, Room Rental and Transient Tax - Exemption - Corporate Facility,
sponsored by the Council President at the request of the County Executive, is scheduled to be
introduced on July 27,2010. A public hearing is tentatively scheduled for September 21.
Bill 44-10 would exempt a corporate lodging facility from the County's hotel-motel tax if
the facility supports that company's headquarters, campus, training facility, or conference
facility; provides lodging exclusively for that company's employees, contractors, vendors, and
other business invitees; and does not offer lodging to the public. As the Legislative Request
Report on ©4 noted: "At this time, the County is aware of one facility that this amendment
would impact, the Lockheed Martin Center for Leadership Excellence (CLE). Lockheed
Martin's annual transient room taxes for the CLE are approximately $450,000."
In the 2010 session the state legislature enacted a similar law,
HB
855 (see ©7-8),
exempting this kind of facility from the state sales tax at an estimated state revenue loss of
$370,900.
1
This packet contains:
Expedited Bill 44-10
Legislative Request Report
Memo from County Executive
Similar state law
F:\LAW\BILLS\! 044 Room Rental And Transient Tax\!ntro MemoDoc
Circle
#
1
4
5
7
'This state law did not receive universal support. In its state legislative candidates' questionnaire, reprinted on the
Maryland Politics Watch
blog, the Montgomery County Peace Action Coalition asked:
In
2010, the Maryland General Assembly enacted H.B.855, which eliminated sales and use taxes for the
lodging of staff, contractors, vendors, and other invitees in certain corporate training facilities. In fact, this
corporate tax break applies only to a permanent training facility for Lockheed Martin, a company that in
2009 reported revenue of $45.2 billion and, according to Forbes, paid its CEO more than $42 million. The
tax break reduces Maryland revenue by $370,900 a year, at a time when 19,000 developmentally disabled
Marylanders are on a waiting list for services and the county education budget has been cut by $97 million.
Would you support rescinding H.B.855?
 PDF to HTML - Convert PDF files to HTML files
Expedited Bill No. ;;:..44..!..--'-10"'--_ _ _--:-_
Concerning: Room Rental and Transient
Tax - Exemption - Corporate Facility
Revised: 7-21-10
Draft No. _1_
Introduced:
July 27, 2010
Expires:
January 27,2012
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective:
July 1, 2010
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the Request ofthe County Executive
AN EXPEDITED ACT
to:
(1)
exempt certain corporate facilities from the County room rental and transient tax;
and
(2)
generally amend the law authorizing the County room rental and transient tax.
By amending
Montgomery County Code
Chapter 52, Finance
Section 52-16
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
 PDF to HTML - Convert PDF files to HTML files
Expedited Bill No.44-10
1
2
3
4
5
6
7
8
Sec.
1.
Section 52-16 is amended as follows:
52-16.
Room rental and transient tax.
*
*
following meanings:
*
(b) The following words and phrases, when used in this Section, have the
* *
*
Broker:
A person, other than the owner or operator of a hotel or motel,
that receives payment for hotel or motel accommodations from a
transient who is subject to tax under subsection (a).
Hotel
or
motel:
9
10
11
12
13
14
15
16
17
18
(1)
Any hotel, inn, hostelry, tourist home or house, motel, apartment
hotel, rooming house, or other lodging place that offers for
compensation sleeping accommodations in the County to 5 or
more transients at anyone time.
(2)
A hotel or motel does not include:
(A) a hospital, medical clinic, nursmg home, rest home,
convalescent home, assisted living facility, or home for
elderly individuals; [or]
(B) a facility owned or leased by an organization that is
exempt from taxation under section 501(c)(3) of the
Internal Revenue Code if the primary use of the facility is
other than housing overnight guests[.]; or
{Q
f!
lodging facility operated solely to support the
headquarters, campus, training facility, or conference
facility, of the corporation that owns the facility, which
offers lodging solely for that corporation's employees,
19
20
21
22
23
24
25
26
o
F:\LAW\BILLS\I044 Room Rental And Transient Tax\BilLDoc
 PDF to HTML - Convert PDF files to HTML files
Expedited Bill No.44-10
27
contractors, vendors, or business invitees, and does not
offer lodging to the public.
Hotelkeeper:
A person that:
28
29
30
(1)
(2)
owns or operates a hotel or motel; or
acts as a broker.
31
32
33
34
35
36
*
Sec. 2.
*
*
Expedited Effective Date.
The Council declares that this Act is necessary for the immediate protection of
the public interest. This Act takes effect on the date when it becomes law, and
applies to any tax levied under County Code Section 52-16 on or after July 1,2010.
Approved:
37
38
Nancy Floreen, President, County Council
Date
39
Approved:
40
Isiah Leggett, County Executive
41
Date
42
43
44
This is a correct copy o,{Council action.
Linda M. Lauer, Clerk of the Council
Date
F:\LAW\BILLS\I044 Room Rental And Transient Tax\Bill.Ooc
 PDF to HTML - Convert PDF files to HTML files
LEGISLATIVE REQUEST REPORT
Bill 44-10
Room Rental and Transient Tax - Exemption - Corporate Facility
Description:
The proposed amendment to County Code Section 52-16 seeks to clarify that a
lodging facility that is owned by a company and exists for the purpose of supporting that
company's operations and is used exclusively by its staff, contractors, vendors and other invitees
is not considered to be a hotel, and, as such, is not subject to the County's transient room tax.
Problem:
Transient lodging facilities that are owned by a private company and used solely to
accommodate its staff, contractors and vendors are currently required to pay the County transient
room tax, although they are not open to the general pUblic.
Goals & Objectives:
To help Montgomery County companies be competitive in bidding on
federal government contracts by ensuring that they are not required to pay the County transient
room taxes for lodging facilities that are for the exclusive use of their staff, contractors, vendors
and other invitees and that are not open to the general public.
Coordination:
Department of Economic Development
Fiscal Impact:
At this time, the County is aware of one facility that this amendment would
impact, the Lockheed Martin Center for Leadership Excellence (CLE). Lockheed Martin's
annual transient room taxes for the CLE are approximately $450,000.
Economic Impact:
The CLE has created 175 new permanent jobs in the County. From April
through December of2009, the CLE brought 9,000 Lockheed employees, contractors, vendors
and other invitees to Bethesda. They generated 6,000 spillover room nights in County hotels and
substantial new revenues for County retail, restaurant and service establishments. According to
Lockheed figures, the projected total economic impact of its overall Montgomery County
operations from direct and induced employment for the period 2007 - 2009 was $7.1 billion.
Experience Elsewhere:
In the 2010 Maryland General Assembly, legislation (HB 855) was
passed that provides an exemption under the State sales and use tax for the "sale of a right to
occupy a room or lodgings as a transient guest at a dormitory or other lodging facility that is
operated solely in support of specified facilities or campuses, that provides lodging solely for
employees, contractors, vendors, and other invitees of the corporation that owns the dormitory or
lodging facility, and that does not offer lodging services to the general public."
Sources of Information:
Corinne Rothblum, Department of Economic Development
240-777 -2011; corinne.rothblurn(a),montgomervcountvrnd.gov
Mike Coveyou, Department of Finance
240-777 -8878; mike.coveyou@!montgomerycountymd.gov
F:\LAW\BILLS\I 044 Room Rental And Transient Tax\LRR.Ooc
 PDF to HTML - Convert PDF files to HTML files
,
l<~,TY
55
OFFICES OF THE COD"NTY EXECUTIVE
Isiah Leggett
County Executive
J--J,.,. .
6])
Ll4
tP'·
~,
Timothy
L.
Firestine
ChiefAdministrative Officer
.J
f
MEMORANDUM
June 21,2010
057656
TO:
Nancy Floreen, President, County Council
~
Isiah Leggett, County Executive
~
j
FROM:
SUBJECT:
/)~/
.
Proposed Amendment to County Code Section 52-16 Room Rental and
.'
Transient Tax.
I am transmitting for Council introduction a bill that amends County law
. governing the County's transient room tax. Specifically, the bill clarifies that a lodging facility
that is owned by a company and exists for the purpose of supporting that company's operations
and that is used exclusively by its staff, contractors, vendors and other invitees is not considered
to be a hotel and is not subject to the County's transient room tax.
The Maryland General Assembly recognized this distinction during the 2010
session.
It
passed legislation
~
855) that provides an exemption under the State sales and use
tax for the "sale of a right to occupy a room or lodgings as a transient guest at a dormitory or
other lodging facility that is operated solely in support of specified facilities or campuses, that
provides lodging solely for employees, contractors, vendors, and other invitees of the corporation
that owns the dormitory or lodging facility, and that does not offerlodging services to the general
public." To synchronize the attached bill with the 2010 State legislation, the effective date of the
bill is retroactive to July 1, 2010
At this time, the County is aware of one facility that falls into this category -
Lockheed Martin's recently constructed Center for Leadership Excellence (CLE) on the campus
of its corporate headquarters in Bethesda. The $110 million CLE provides a high-security, full
service, state-of-the-art training facility with 183 single occupancy sleeping rooms that are for the
exclusive use of Lockheed Martin employees, contractors, vendors and other invitees. The
Defense Contract Audit Agency requires the company to use its internal employee credit card
system to allocate charges to the appropriate federal contract (Lockheed Martin has an agreement
to charge the federal
per diem
rate in all of its federal contracts). As a consequence, since
opening in April 2009, the CLE has been treated as a hotel and has been subject to the County's
room rental transient tax, even though it is not open or accessible to the general public and is not
operated on a for profit basis.
101 Monroe Street· Rockville, Maryland 20850
240-777-2500 • 240-777-2544 TTY· 240-777-2518 FAX
Vvww,montgomerycountymd.gov
 PDF to HTML - Convert PDF files to HTML files
l
r,
Nancy Floreen
June 21,2010
Page 2
In these challenging economic times, it is critically important that the County
create an enabling business environment, that we identify and address unwarranted impediments
to private sector growth, and that we help our companies be competitive in bidding ori federal
government contracts. I ask that you introduce this bill on my behalf and thank you for your
prompt consideration.
Attachments
cc:
Jennifer Barrett, Director; Department of Finance
Joe Beach, Director, Office of Management and Budget
Kathleen Boucher, Assistant County Administrative Officer
Jennifer Hughes, Special Assistant to the County Executive
Steve Silverman, Director, Department of Economic Development
 PDF to HTML - Convert PDF files to HTML files
Martin O'Malley, Governor
Ch.706
Chapter 706
(House Bill 855)
AN ACT concerning
Sales and Use Tax - Exemption - Lodging at!! Corporate Training Center
Mtndg~nn8ry
m
C
fHiUity
MC iH! 1Q
FOR the purpose of providing an exemption under the sales and use tax for the sale of
a right to occupy a room or lodgings as a transient guest at certain facilities
ift=8..
8@rtai,t
@@1:iftty
operated
~rim!lFMsT
in support of certain facilities or campuses;
and generally relating to a sales and use tax exemption for the sale of certain
lodging at certain facilities.
BY adding to
Article - Tax - General
Section 11-231
Annotated Code of Maryland
(2004 Replacement Volume and 2009 Supplement)
SECTION L BE IT ENACTED BY THE GENERAL ASSEMBLY OF
l\1ARYLAND, That the Laws of Maryland read as follows:
Article - Tax - General
11-231.
THE SALES AND USE TAX DOES NOT APPLY TO THE SALE OF A RIGHT TO
OCCUpy A ROOM OR LODGINGS AS A TRANSIENT GUEST AT A DORMITORY OR
OTHER LODGING FACILITY UT
1\~QN!fGQl\IER¥
CQ{JN!f¥ THAT:
IS OPERATED
PBII\'I:t\BI15¥
SOLELY IN SUPPORT OF A
CORPORATE OR ANY OTHER HEADQUARTERS, TRAINING, CONFERENCE, OR
AWARDS FACILITY OR CAMPUS;
PROVIDES
LODGING
PBEQOI\lIN.l."itfT15¥
SOLELY
EMPLOYEES, CONTRACTORS, VENDORS, AND OTHER INVITEES OF
CORPORATION THAT OWNS THE DORMITORY OR LODGING FACILITY; AND
(1)
(2)
FOR
THE
-1­
 PDF to HTML - Convert PDF files to HTML files
Ch.706
(3)
PUBLIC.
2010 LAWS OF MARYLAND
DOES NOT OFFER LODGING SERVICES TO THE GENERAL
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect
July 1, 2010.
Approved
by
the Governor,
May
20, 2010.
-2­
 PDF to HTML - Convert PDF files to HTML files
AGENDA ITEM 16
July 27, 2010
Introduction
MEMORANDUM
TO:
FROM:
County Council
~
Michael Faden, Senior Legislative Attorney
Introduction:
Expedited Bill 44-1 0, Room Rental and Transient Tax ­
Exemption - Corporate Facility
SUBJECT:
Expedited Bill 44-10, Room Rental and Transient Tax - Exemption - Corporate Facility,
sponsored by the Council President at the request of the County Executive, is scheduled to be
introduced on July 27,2010. A public hearing is tentatively scheduled for September 21.
Bill 44-10 would exempt a corporate lodging facility from the County's hotel-motel tax if
the facility supports that company's headquarters, campus, training facility, or conference
facility; provides lodging exclusively for that company's employees, contractors, vendors, and
other business invitees; and does not offer lodging to the public. As the Legislative Request
Report on ©4 noted: "At this time, the County is aware of one facility that this amendment
would impact, the Lockheed Martin Center for Leadership Excellence (CLE). Lockheed
Martin's annual transient room taxes for the CLE are approximately $450,000."
In the 2010 session the state legislature enacted a similar law,
HB
855 (see ©7-8),
exempting this kind of facility from the state sales tax at an estimated state revenue loss of
$370,900.
1
This packet contains:
Expedited Bill 44-10
Legislative Request Report
Memo from County Executive
Similar state law
F:\LAW\BILLS\! 044 Room Rental And Transient Tax\!ntro MemoDoc
Circle
#
1
4
5
7
'This state law did not receive universal support. In its state legislative candidates' questionnaire, reprinted on the
Maryland Politics Watch
blog, the Montgomery County Peace Action Coalition asked:
In
2010, the Maryland General Assembly enacted H.B.855, which eliminated sales and use taxes for the
lodging of staff, contractors, vendors, and other invitees in certain corporate training facilities. In fact, this
corporate tax break applies only to a permanent training facility for Lockheed Martin, a company that in
2009 reported revenue of $45.2 billion and, according to Forbes, paid its CEO more than $42 million. The
tax break reduces Maryland revenue by $370,900 a year, at a time when 19,000 developmentally disabled
Marylanders are on a waiting list for services and the county education budget has been cut by $97 million.
Would you support rescinding H.B.855?
 PDF to HTML - Convert PDF files to HTML files
Expedited Bill No. ;;:..44..!..--'-10"'--_ _ _--:-_
Concerning: Room Rental and Transient
Tax - Exemption - Corporate Facility
Revised: 7-21-10
Draft No. _1_
Introduced:
July 27, 2010
Expires:
January 27,2012
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective:
July 1, 2010
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the Request ofthe County Executive
AN EXPEDITED ACT
to:
(1)
exempt certain corporate facilities from the County room rental and transient tax;
and
(2)
generally amend the law authorizing the County room rental and transient tax.
By amending
Montgomery County Code
Chapter 52, Finance
Section 52-16
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
 PDF to HTML - Convert PDF files to HTML files
Expedited Bill No.44-10
1
2
3
4
5
6
7
8
Sec.
1.
Section 52-16 is amended as follows:
52-16.
Room rental and transient tax.
*
*
following meanings:
*
(b) The following words and phrases, when used in this Section, have the
* *
*
Broker:
A person, other than the owner or operator of a hotel or motel,
that receives payment for hotel or motel accommodations from a
transient who is subject to tax under subsection (a).
Hotel
or
motel:
9
10
11
12
13
14
15
16
17
18
(1)
Any hotel, inn, hostelry, tourist home or house, motel, apartment
hotel, rooming house, or other lodging place that offers for
compensation sleeping accommodations in the County to 5 or
more transients at anyone time.
(2)
A hotel or motel does not include:
(A) a hospital, medical clinic, nursmg home, rest home,
convalescent home, assisted living facility, or home for
elderly individuals; [or]
(B) a facility owned or leased by an organization that is
exempt from taxation under section 501(c)(3) of the
Internal Revenue Code if the primary use of the facility is
other than housing overnight guests[.]; or
{Q
f!
lodging facility operated solely to support the
headquarters, campus, training facility, or conference
facility, of the corporation that owns the facility, which
offers lodging solely for that corporation's employees,
19
20
21
22
23
24
25
26
o
F:\LAW\BILLS\I044 Room Rental And Transient Tax\BilLDoc
 PDF to HTML - Convert PDF files to HTML files
Expedited Bill No.44-10
27
contractors, vendors, or business invitees, and does not
offer lodging to the public.
Hotelkeeper:
A person that:
28
29
30
(1)
(2)
owns or operates a hotel or motel; or
acts as a broker.
31
32
33
34
35
36
*
Sec. 2.
*
*
Expedited Effective Date.
The Council declares that this Act is necessary for the immediate protection of
the public interest. This Act takes effect on the date when it becomes law, and
applies to any tax levied under County Code Section 52-16 on or after July 1,2010.
Approved:
37
38
Nancy Floreen, President, County Council
Date
39
Approved:
40
Isiah Leggett, County Executive
41
Date
42
43
44
This is a correct copy o,{Council action.
Linda M. Lauer, Clerk of the Council
Date
F:\LAW\BILLS\I044 Room Rental And Transient Tax\Bill.Ooc
 PDF to HTML - Convert PDF files to HTML files
LEGISLATIVE REQUEST REPORT
Bill 44-10
Room Rental and Transient Tax - Exemption - Corporate Facility
Description:
The proposed amendment to County Code Section 52-16 seeks to clarify that a
lodging facility that is owned by a company and exists for the purpose of supporting that
company's operations and is used exclusively by its staff, contractors, vendors and other invitees
is not considered to be a hotel, and, as such, is not subject to the County's transient room tax.
Problem:
Transient lodging facilities that are owned by a private company and used solely to
accommodate its staff, contractors and vendors are currently required to pay the County transient
room tax, although they are not open to the general pUblic.
Goals & Objectives:
To help Montgomery County companies be competitive in bidding on
federal government contracts by ensuring that they are not required to pay the County transient
room taxes for lodging facilities that are for the exclusive use of their staff, contractors, vendors
and other invitees and that are not open to the general public.
Coordination:
Department of Economic Development
Fiscal Impact:
At this time, the County is aware of one facility that this amendment would
impact, the Lockheed Martin Center for Leadership Excellence (CLE). Lockheed Martin's
annual transient room taxes for the CLE are approximately $450,000.
Economic Impact:
The CLE has created 175 new permanent jobs in the County. From April
through December of2009, the CLE brought 9,000 Lockheed employees, contractors, vendors
and other invitees to Bethesda. They generated 6,000 spillover room nights in County hotels and
substantial new revenues for County retail, restaurant and service establishments. According to
Lockheed figures, the projected total economic impact of its overall Montgomery County
operations from direct and induced employment for the period 2007 - 2009 was $7.1 billion.
Experience Elsewhere:
In the 2010 Maryland General Assembly, legislation (HB 855) was
passed that provides an exemption under the State sales and use tax for the "sale of a right to
occupy a room or lodgings as a transient guest at a dormitory or other lodging facility that is
operated solely in support of specified facilities or campuses, that provides lodging solely for
employees, contractors, vendors, and other invitees of the corporation that owns the dormitory or
lodging facility, and that does not offer lodging services to the general public."
Sources of Information:
Corinne Rothblum, Department of Economic Development
240-777 -2011; corinne.rothblurn(a),montgomervcountvrnd.gov
Mike Coveyou, Department of Finance
240-777 -8878; mike.coveyou@!montgomerycountymd.gov
F:\LAW\BILLS\I 044 Room Rental And Transient Tax\LRR.Ooc
 PDF to HTML - Convert PDF files to HTML files
,
l<~,TY
55
OFFICES OF THE COD"NTY EXECUTIVE
Isiah Leggett
County Executive
J--J,.,. .
6])
Ll4
tP'·
~,
Timothy
L.
Firestine
ChiefAdministrative Officer
.J
f
MEMORANDUM
June 21,2010
057656
TO:
Nancy Floreen, President, County Council
~
Isiah Leggett, County Executive
~
j
FROM:
SUBJECT:
/)~/
.
Proposed Amendment to County Code Section 52-16 Room Rental and
.'
Transient Tax.
I am transmitting for Council introduction a bill that amends County law
. governing the County's transient room tax. Specifically, the bill clarifies that a lodging facility
that is owned by a company and exists for the purpose of supporting that company's operations
and that is used exclusively by its staff, contractors, vendors and other invitees is not considered
to be a hotel and is not subject to the County's transient room tax.
The Maryland General Assembly recognized this distinction during the 2010
session.
It
passed legislation
~
855) that provides an exemption under the State sales and use
tax for the "sale of a right to occupy a room or lodgings as a transient guest at a dormitory or
other lodging facility that is operated solely in support of specified facilities or campuses, that
provides lodging solely for employees, contractors, vendors, and other invitees of the corporation
that owns the dormitory or lodging facility, and that does not offerlodging services to the general
public." To synchronize the attached bill with the 2010 State legislation, the effective date of the
bill is retroactive to July 1, 2010
At this time, the County is aware of one facility that falls into this category -
Lockheed Martin's recently constructed Center for Leadership Excellence (CLE) on the campus
of its corporate headquarters in Bethesda. The $110 million CLE provides a high-security, full
service, state-of-the-art training facility with 183 single occupancy sleeping rooms that are for the
exclusive use of Lockheed Martin employees, contractors, vendors and other invitees. The
Defense Contract Audit Agency requires the company to use its internal employee credit card
system to allocate charges to the appropriate federal contract (Lockheed Martin has an agreement
to charge the federal
per diem
rate in all of its federal contracts). As a consequence, since
opening in April 2009, the CLE has been treated as a hotel and has been subject to the County's
room rental transient tax, even though it is not open or accessible to the general public and is not
operated on a for profit basis.
101 Monroe Street· Rockville, Maryland 20850
240-777-2500 • 240-777-2544 TTY· 240-777-2518 FAX
Vvww,montgomerycountymd.gov
 PDF to HTML - Convert PDF files to HTML files
l
r,
Nancy Floreen
June 21,2010
Page 2
In these challenging economic times, it is critically important that the County
create an enabling business environment, that we identify and address unwarranted impediments
to private sector growth, and that we help our companies be competitive in bidding ori federal
government contracts. I ask that you introduce this bill on my behalf and thank you for your
prompt consideration.
Attachments
cc:
Jennifer Barrett, Director; Department of Finance
Joe Beach, Director, Office of Management and Budget
Kathleen Boucher, Assistant County Administrative Officer
Jennifer Hughes, Special Assistant to the County Executive
Steve Silverman, Director, Department of Economic Development
 PDF to HTML - Convert PDF files to HTML files
Martin O'Malley, Governor
Ch.706
Chapter 706
(House Bill 855)
AN ACT concerning
Sales and Use Tax - Exemption - Lodging at!! Corporate Training Center
Mtndg~nn8ry
m
C
fHiUity
MC iH! 1Q
FOR the purpose of providing an exemption under the sales and use tax for the sale of
a right to occupy a room or lodgings as a transient guest at certain facilities
ift=8..
8@rtai,t
@@1:iftty
operated
~rim!lFMsT
in support of certain facilities or campuses;
and generally relating to a sales and use tax exemption for the sale of certain
lodging at certain facilities.
BY adding to
Article - Tax - General
Section 11-231
Annotated Code of Maryland
(2004 Replacement Volume and 2009 Supplement)
SECTION L BE IT ENACTED BY THE GENERAL ASSEMBLY OF
l\1ARYLAND, That the Laws of Maryland read as follows:
Article - Tax - General
11-231.
THE SALES AND USE TAX DOES NOT APPLY TO THE SALE OF A RIGHT TO
OCCUpy A ROOM OR LODGINGS AS A TRANSIENT GUEST AT A DORMITORY OR
OTHER LODGING FACILITY UT
1\~QN!fGQl\IER¥
CQ{JN!f¥ THAT:
IS OPERATED
PBII\'I:t\BI15¥
SOLELY IN SUPPORT OF A
CORPORATE OR ANY OTHER HEADQUARTERS, TRAINING, CONFERENCE, OR
AWARDS FACILITY OR CAMPUS;
PROVIDES
LODGING
PBEQOI\lIN.l."itfT15¥
SOLELY
EMPLOYEES, CONTRACTORS, VENDORS, AND OTHER INVITEES OF
CORPORATION THAT OWNS THE DORMITORY OR LODGING FACILITY; AND
(1)
(2)
FOR
THE
-1­
 PDF to HTML - Convert PDF files to HTML files
Ch.706
(3)
PUBLIC.
2010 LAWS OF MARYLAND
DOES NOT OFFER LODGING SERVICES TO THE GENERAL
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect
July 1, 2010.
Approved
by
the Governor,
May
20, 2010.
-2­
 PDF to HTML - Convert PDF files to HTML files
AGENDA ITEM 16
July 27, 2010
Introduction
MEMORANDUM
TO:
FROM:
County Council
~
Michael Faden, Senior Legislative Attorney
Introduction:
Expedited Bill 44-1 0, Room Rental and Transient Tax ­
Exemption - Corporate Facility
SUBJECT:
Expedited Bill 44-10, Room Rental and Transient Tax - Exemption - Corporate Facility,
sponsored by the Council President at the request of the County Executive, is scheduled to be
introduced on July 27,2010. A public hearing is tentatively scheduled for September 21.
Bill 44-10 would exempt a corporate lodging facility from the County's hotel-motel tax if
the facility supports that company's headquarters, campus, training facility, or conference
facility; provides lodging exclusively for that company's employees, contractors, vendors, and
other business invitees; and does not offer lodging to the public. As the Legislative Request
Report on ©4 noted: "At this time, the County is aware of one facility that this amendment
would impact, the Lockheed Martin Center for Leadership Excellence (CLE). Lockheed
Martin's annual transient room taxes for the CLE are approximately $450,000."
In the 2010 session the state legislature enacted a similar law,
HB
855 (see ©7-8),
exempting this kind of facility from the state sales tax at an estimated state revenue loss of
$370,900.
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This packet contains:
Expedited Bill 44-10
Legislative Request Report
Memo from County Executive
Similar state law
F:\LAW\BILLS\! 044 Room Rental And Transient Tax\!ntro MemoDoc
Circle
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'This state law did not receive universal support. In its state legislative candidates' questionnaire, reprinted on the
Maryland Politics Watch
blog, the Montgomery County Peace Action Coalition asked:
In
2010, the Maryland General Assembly enacted H.B.855, which eliminated sales and use taxes for the
lodging of staff, contractors, vendors, and other invitees in certain corporate training facilities. In fact, this
corporate tax break applies only to a permanent training facility for Lockheed Martin, a company that in
2009 reported revenue of $45.2 billion and, according to Forbes, paid its CEO more than $42 million. The
tax break reduces Maryland revenue by $370,900 a year, at a time when 19,000 developmentally disabled
Marylanders are on a waiting list for services and the county education budget has been cut by $97 million.
Would you support rescinding H.B.855?
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Expedited Bill No. ;;:..44..!..--'-10"'--_ _ _--:-_
Concerning: Room Rental and Transient
Tax - Exemption - Corporate Facility
Revised: 7-21-10
Draft No. _1_
Introduced:
July 27, 2010
Expires:
January 27,2012
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ __
Effective:
July 1, 2010
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the Request ofthe County Executive
AN EXPEDITED ACT
to:
(1)
exempt certain corporate facilities from the County room rental and transient tax;
and
(2)
generally amend the law authorizing the County room rental and transient tax.
By amending
Montgomery County Code
Chapter 52, Finance
Section 52-16
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law by original bill.
Deletedfrom existing law by original bill.
Added by amendment.
Deletedfrom existing law or the bill by amendment.
Existing law unaffected by bill.
The County Council for Montgomery County, Maryland approves the following Act:
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Expedited Bill No.44-10
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Sec.
1.
Section 52-16 is amended as follows:
52-16.
Room rental and transient tax.
*
*
following meanings:
*
(b) The following words and phrases, when used in this Section, have the
* *
*
Broker:
A person, other than the owner or operator of a hotel or motel,
that receives payment for hotel or motel accommodations from a
transient who is subject to tax under subsection (a).
Hotel
or
motel:
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(1)
Any hotel, inn, hostelry, tourist home or house, motel, apartment
hotel, rooming house, or other lodging place that offers for
compensation sleeping accommodations in the County to 5 or
more transients at anyone time.
(2)
A hotel or motel does not include:
(A) a hospital, medical clinic, nursmg home, rest home,
convalescent home, assisted living facility, or home for
elderly individuals; [or]
(B) a facility owned or leased by an organization that is
exempt from taxation under section 501(c)(3) of the
Internal Revenue Code if the primary use of the facility is
other than housing overnight guests[.]; or
{Q
f!
lodging facility operated solely to support the
headquarters, campus, training facility, or conference
facility, of the corporation that owns the facility, which
offers lodging solely for that corporation's employees,
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o
F:\LAW\BILLS\I044 Room Rental And Transient Tax\BilLDoc
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Expedited Bill No.44-10
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contractors, vendors, or business invitees, and does not
offer lodging to the public.
Hotelkeeper:
A person that:
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(1)
(2)
owns or operates a hotel or motel; or
acts as a broker.
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*
Sec. 2.
*
*
Expedited Effective Date.
The Council declares that this Act is necessary for the immediate protection of
the public interest. This Act takes effect on the date when it becomes law, and
applies to any tax levied under County Code Section 52-16 on or after July 1,2010.
Approved:
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Nancy Floreen, President, County Council
Date
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Approved:
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Isiah Leggett, County Executive
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Date
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This is a correct copy o,{Council action.
Linda M. Lauer, Clerk of the Council
Date
F:\LAW\BILLS\I044 Room Rental And Transient Tax\Bill.Ooc
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LEGISLATIVE REQUEST REPORT
Bill 44-10
Room Rental and Transient Tax - Exemption - Corporate Facility
Description:
The proposed amendment to County Code Section 52-16 seeks to clarify that a
lodging facility that is owned by a company and exists for the purpose of supporting that
company's operations and is used exclusively by its staff, contractors, vendors and other invitees
is not considered to be a hotel, and, as such, is not subject to the County's transient room tax.
Problem:
Transient lodging facilities that are owned by a private company and used solely to
accommodate its staff, contractors and vendors are currently required to pay the County transient
room tax, although they are not open to the general pUblic.
Goals & Objectives:
To help Montgomery County companies be competitive in bidding on
federal government contracts by ensuring that they are not required to pay the County transient
room taxes for lodging facilities that are for the exclusive use of their staff, contractors, vendors
and other invitees and that are not open to the general public.
Coordination:
Department of Economic Development
Fiscal Impact:
At this time, the County is aware of one facility that this amendment would
impact, the Lockheed Martin Center for Leadership Excellence (CLE). Lockheed Martin's
annual transient room taxes for the CLE are approximately $450,000.
Economic Impact:
The CLE has created 175 new permanent jobs in the County. From April
through December of2009, the CLE brought 9,000 Lockheed employees, contractors, vendors
and other invitees to Bethesda. They generated 6,000 spillover room nights in County hotels and
substantial new revenues for County retail, restaurant and service establishments. According to
Lockheed figures, the projected total economic impact of its overall Montgomery County
operations from direct and induced employment for the period 2007 - 2009 was $7.1 billion.
Experience Elsewhere:
In the 2010 Maryland General Assembly, legislation (HB 855) was
passed that provides an exemption under the State sales and use tax for the "sale of a right to
occupy a room or lodgings as a transient guest at a dormitory or other lodging facility that is
operated solely in support of specified facilities or campuses, that provides lodging solely for
employees, contractors, vendors, and other invitees of the corporation that owns the dormitory or
lodging facility, and that does not offer lodging services to the general public."
Sources of Information:
Corinne Rothblum, Department of Economic Development
240-777 -2011; corinne.rothblurn(a),montgomervcountvrnd.gov
Mike Coveyou, Department of Finance
240-777 -8878; mike.coveyou@!montgomerycountymd.gov
F:\LAW\BILLS\I 044 Room Rental And Transient Tax\LRR.Ooc
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,
l<~,TY
55
OFFICES OF THE COD"NTY EXECUTIVE
Isiah Leggett
County Executive
J--J,.,. .
6])
Ll4
tP'·
~,
Timothy
L.
Firestine
ChiefAdministrative Officer
.J
f
MEMORANDUM
June 21,2010
057656
TO:
Nancy Floreen, President, County Council
~
Isiah Leggett, County Executive
~
j
FROM:
SUBJECT:
/)~/
.
Proposed Amendment to County Code Section 52-16 Room Rental and
.'
Transient Tax.
I am transmitting for Council introduction a bill that amends County law
. governing the County's transient room tax. Specifically, the bill clarifies that a lodging facility
that is owned by a company and exists for the purpose of supporting that company's operations
and that is used exclusively by its staff, contractors, vendors and other invitees is not considered
to be a hotel and is not subject to the County's transient room tax.
The Maryland General Assembly recognized this distinction during the 2010
session.
It
passed legislation
~
855) that provides an exemption under the State sales and use
tax for the "sale of a right to occupy a room or lodgings as a transient guest at a dormitory or
other lodging facility that is operated solely in support of specified facilities or campuses, that
provides lodging solely for employees, contractors, vendors, and other invitees of the corporation
that owns the dormitory or lodging facility, and that does not offerlodging services to the general
public." To synchronize the attached bill with the 2010 State legislation, the effective date of the
bill is retroactive to July 1, 2010
At this time, the County is aware of one facility that falls into this category -
Lockheed Martin's recently constructed Center for Leadership Excellence (CLE) on the campus
of its corporate headquarters in Bethesda. The $110 million CLE provides a high-security, full
service, state-of-the-art training facility with 183 single occupancy sleeping rooms that are for the
exclusive use of Lockheed Martin employees, contractors, vendors and other invitees. The
Defense Contract Audit Agency requires the company to use its internal employee credit card
system to allocate charges to the appropriate federal contract (Lockheed Martin has an agreement
to charge the federal
per diem
rate in all of its federal contracts). As a consequence, since
opening in April 2009, the CLE has been treated as a hotel and has been subject to the County's
room rental transient tax, even though it is not open or accessible to the general public and is not
operated on a for profit basis.
101 Monroe Street· Rockville, Maryland 20850
240-777-2500 • 240-777-2544 TTY· 240-777-2518 FAX
Vvww,montgomerycountymd.gov
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l
r,
Nancy Floreen
June 21,2010
Page 2
In these challenging economic times, it is critically important that the County
create an enabling business environment, that we identify and address unwarranted impediments
to private sector growth, and that we help our companies be competitive in bidding ori federal
government contracts. I ask that you introduce this bill on my behalf and thank you for your
prompt consideration.
Attachments
cc:
Jennifer Barrett, Director; Department of Finance
Joe Beach, Director, Office of Management and Budget
Kathleen Boucher, Assistant County Administrative Officer
Jennifer Hughes, Special Assistant to the County Executive
Steve Silverman, Director, Department of Economic Development
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Martin O'Malley, Governor
Ch.706
Chapter 706
(House Bill 855)
AN ACT concerning
Sales and Use Tax - Exemption - Lodging at!! Corporate Training Center
Mtndg~nn8ry
m
C
fHiUity
MC iH! 1Q
FOR the purpose of providing an exemption under the sales and use tax for the sale of
a right to occupy a room or lodgings as a transient guest at certain facilities
ift=8..
8@rtai,t
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operated
~rim!lFMsT
in support of certain facilities or campuses;
and generally relating to a sales and use tax exemption for the sale of certain
lodging at certain facilities.
BY adding to
Article - Tax - General
Section 11-231
Annotated Code of Maryland
(2004 Replacement Volume and 2009 Supplement)
SECTION L BE IT ENACTED BY THE GENERAL ASSEMBLY OF
l\1ARYLAND, That the Laws of Maryland read as follows:
Article - Tax - General
11-231.
THE SALES AND USE TAX DOES NOT APPLY TO THE SALE OF A RIGHT TO
OCCUpy A ROOM OR LODGINGS AS A TRANSIENT GUEST AT A DORMITORY OR
OTHER LODGING FACILITY UT
1\~QN!fGQl\IER¥
CQ{JN!f¥ THAT:
IS OPERATED
PBII\'I:t\BI15¥
SOLELY IN SUPPORT OF A
CORPORATE OR ANY OTHER HEADQUARTERS, TRAINING, CONFERENCE, OR
AWARDS FACILITY OR CAMPUS;
PROVIDES
LODGING
PBEQOI\lIN.l."itfT15¥
SOLELY
EMPLOYEES, CONTRACTORS, VENDORS, AND OTHER INVITEES OF
CORPORATION THAT OWNS THE DORMITORY OR LODGING FACILITY; AND
(1)
(2)
FOR
THE
-1­
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Ch.706
(3)
PUBLIC.
2010 LAWS OF MARYLAND
DOES NOT OFFER LODGING SERVICES TO THE GENERAL
SECTION 2. AND BE IT FURTHER ENACTED, That this Act shall take effect
July 1, 2010.
Approved
by
the Governor,
May
20, 2010.
-2­